Quiz #211

• 1. Modern Monetary Theory (MMT) indicates that a nation can fall into mass unemployment if real wages growth is rapid.
• True
• False
• 2. The private domestic sector will typically be in deficit when a sovereign national government runs a balanced budget over the business cycle (peak to peak) and the nation runs an external deficit over the same cycle.
• False
• True
• 3. Under a fiat monetary system, the absence of currency convertibility means:
• (a) there is no reason for people to hold currency as a hedge against gold price falls.
• (b) by imposing a fine on anyone who has a red car, the government can motivate red car owners to offer goods and services in return for public spending.
• (c) the currency becomes convertible into government bonds rather than gold.

Quiz #211 answers

• 1. Modern Monetary Theory (MMT) indicates that a nation can fall into mass unemployment if real wages growth is rapid.

Answer: True

• 2. The private domestic sector will typically be in deficit when a sovereign national government runs a balanced budget over the business cycle (peak to peak) and the nation runs an external deficit over the same cycle.

Answer: False

• 3. Under a fiat monetary system, the absence of currency convertibility means:

Answer: (b) by imposing a fine on anyone who has a red car, the government can motivate red car owners to offer goods and services in return for public spending.